Publication
Abstract
We use experimental measures oftime discounting and risk aversion for villagers in south India to highlight behavioral features of microcredit, a financial tool designed to reduce poverty and fix credit market imperfections.The evidence suggests that microcredit contractsmay do more than reduce moral hazard and adverse selection by imposing new forms of discipline on borrowers. We find that, conditional on borrowing from any source, women with present-biased preferences are more likely than others to borrow through microcredit institutions.
Another particular contribution of microcredit may thus be to provide helpful structure for borrowers seeking self-discipline.
